Four years ago, Reese Lackey's three-part financial plan was simple:
* Buy a home in what he heard was the most popular Southland style (Spanish).
* Remodel it with trendy features (tile floors, granite kitchen counters, stainless steel appliances).
* Live in the house for two years to satisfy tax laws and "flip" it for a profit.
So why is Lackey still living in the Hollywood Hills home he bought and remodeled in 1997, even though it has increased $300,000 in value?
And why is he talking about his "10-year plan" for future improvements?
"I did it to make money, and the trick was on me," Lackey says. "I fell in love with the house.... I don't want to leave."
With views of several Hollywood studios and two mountain ranges in the distance, the 1927 hillside house overlooks a wooded canyon where hawks circle and coyotes run.
Lackey's first look at the house was not promising. It was during the late 1990s when "the market was insanely hot," and he was outbid on one house after another. He saw a two-bedroom, two-bathroom house listed on the Internet, but when he drove by all he noticed was a rotten wood fence at the edge of the sidewalk and a dead tree trunk.
"It was gross looking," recalled Lackey, who works for an investment management firm. "It was so ugly, I didn't even want to look at it."
A real estate agent later pointed out the house, and Lackey realized "there's that same stupid house." The agent, though, insisted he take a look inside.
It was a clear day and, after he walked through the gate, Lackey was struck by the vast views from the French doors and balcony, the wood and tile floors throughout and the 15-foot-high, beamed ceiling in the living room. A curving staircase led down to the bedrooms, the bathrooms, a den and a wide veranda tucked into the treetops in back.
"I should have given this house a second look earlier," he says. "It had an estate feeling."
After a series of offers and counteroffers, he bought the house in December 1997, all the while worried that no one was making backup offers. But two inspections--one by a structural engineer--revealed the house was sound. Plus, it remained leak-free during the El Nino rains that year.
As soon as Lackey decided to buy the house, he knew exactly how he would turn it around for a profit.
First and foremost, it needed curb appeal, which he would achieve with a low garden wall fronted with flowering plants. Lackey also decided to cover the concrete porch with Saltillo tile and replace the front door.
Inside, the bland kitchen would need the most work. It had virtually no charm with its plain wooden cabinets and counters covered by white tile with dark grout. The spectacular views were framed with a tacky louvered window.
To create a kitchen that future buyers would love, Lackey chose stainless steel appliances--a Dynamic Cooking Systems range, a Sub-Zero refrigerator and a Bosch dishwasher. For the floors, he used travertine marble tile that he got at a bargain. For the counters, slab granite. The jalousie window would be replaced with a French casement.
To get started, Lackey hired a painting contractor and a tile contractor. He was then working from his home in Redondo Beach and able to visit the job every day to monitor progress.
However, as the job became more complicated, he hired a general contractor, Richard Grenier, whom he had seen working on another job in the neighborhood, to coordinate the woodworker, lather, plasterer, plumber, electrician, etc.
Within five weeks, Lackey was able to move into the house, while the work continued for several more months.
The master bathroom was almost completely redone. New French doors replaced windows to open the master bedroom to the veranda.
Gutters were repaired, electrical upgraded, floors refinished and new lighting installed.
In the beginning, Lackey budgeted $35,000 for the upgrades, but ended up spending $55,000. When friends comment that going $20,000 over budget is not bad, Lackey says, "It felt bad at the time." But he now sees that he was "naive" about how much work the house needed.
Still, he saved thousands of dollars by shopping, bargaining and negotiating "everything," including the contractor's fee and the prices of appliances. The contractor saved him thousands by recommending he not replace the high-quality metal tile roof with a clay roof, as Lackey had first envisioned. Lackey saved several more thousand in the kitchen by simply painting the cabinets, which he determined to be sturdy. A French window from the master bedroom, removed to make way for a French door, was cut down and reused in the kitchen.
As he lived in the house, Lackey became more aware of its virtues. The location was better than his previous oceanfront address in Redondo Beach, where he rarely got visitors.